Why Singapore's agribusiness players must brace for falling trading margins

Catalyst is still a quarter away.

According to Nomura, it expects this quarter to see recovery from a low base of 2012 Q1CY, especially for Wilmar and Olam.

Nomura noted that overall, it still expects Agri trading margins to remain weak. The stocks, trading at ~10-13x CY13F and ~8-10x CY14F EPS, continue to look good on risk-reward, but a catalyst (strong earnings rebound) could still be at least a quarter away.

Here's more:

For Wilmar, we expect a decline in palm refining margins as high Indonesian margins normalize. Also, we don't expect any recovery in crush margins.

Refining volumes should increase, in our view, as the new capacity in Indonesia should contribute for the full quarter. We believe the key will be plantation margins, as average CPO prices in Q1 were much lower than those last year. We believe sugar should continue to be loss making in 1HCY13.

For Olam, volume should continue to jump, in our view, led by food staples (grain trading). We do expect an increase in industrial margins from a low base seen in 1QCY12.

For Noble, we expect earnings to decline as energy and Agri margins should moderate from Q1CY12 levels, in our view.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia